Rupee Declines 21 Paise to Close at 95.28 Against US Dollar Amid Rising Oil Prices

The Indian rupee weakened on Wednesday, losing 21 paise to close provisionally at 95.28 against the US dollar. The downward pressure on the domestic currency was primarily attributed to a stronger greenback, positive US Treasury yields, and elevated crude oil prices.

Trading in the interbank foreign exchange market began at 95.01 per dollar. During the session, the currency slipped further to touch an intra-day low of 95.29 before settling at its provisional closing of 95.28, marking a decline from its previous close. In comparison, the rupee had appreciated by 8 paise to close at 95.07 against the dollar on Tuesday.

Market experts point out that macroeconomic factors continue to dictate currency movements. Anindya Banerjee, Head of Commodity and Currency Research at Kotak NEO, noted that elevated oil prices sustain underlying demand for the dollar. He added that foreign investment flows, the performance of the global dollar, and the market operations of the Reserve Bank of India (RBI) will guide the direction of the currency.

"For India, the combination of elevated oil prices and high US yields remains particularly relevant because it affects both import-related dollar demand and international capital flows," Banerjee stated, adding that the US Federal Reserve's upcoming decisions will remain a key trigger for global markets.

At the time of trading, the dollar index—which measures the strength of the greenback against a basket of six major currencies—was up 0.08 per cent at 102.40. Meanwhile, Brent crude futures, the global benchmark for oil, rose 1.06 per cent to trade at $115.08 per barrel.

Forex traders noted that while the rupee is expected to maintain a slight negative bias due to strong US Treasury yields and high oil prices, potential intervention by the Reserve Bank of India could provide support at lower levels. Market participants are also awaiting the upcoming Federal Open Market Committee (FOMC) decision.

On the domestic front, equity markets mirrored the cautious sentiment. The benchmark Sensex declined by 352.64 points to close at 73,246.03, while the Nifty fell 50.90 points to settle at 22,698.85. Despite the market downturn, exchange data showed that Foreign Institutional Investors (FIIs) were net buyers of equities worth ₹4,240.39 crore on Tuesday.

"Fluctuations in the foreign exchange market and rising crude oil prices directly impact import costs and operating expenditures for businesses across sectors. For entrepreneurs and startup founders, currency depreciation and macroeconomic shifts mean that financial planning, especially regarding cross-border transactions and capital allocation, must remain agile. Monitoring global interest rate trends and domestic market interventions by the RBI is essential for navigating these financial headwinds effectively." — Dr. Shishir Gupta, Founder & CEO, StartupLanes